About 12.2 million people signed up for subsidized private health insurance under the Affordable Care Act this year. The number currently enrolled is estimated to be around 10 million, due to attrition also seen in prior years. less

About 12.2 million people signed up for subsidized private health insurance under the Affordable Care Act this year. The number currently enrolled is estimated to be around 10 million, due to attrition also ... more

Photo: Associated Press File Photo

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About 12.2 million people signed up for subsidized private health insurance under the Affordable Care Act this year. The number currently enrolled is estimated to be around 10 million, due to attrition also seen in prior years. less

About 12.2 million people signed up for subsidized private health insurance under the Affordable Care Act this year. The number currently enrolled is estimated to be around 10 million, due to attrition also ... more

If President Donald Trump follows through on his threat to stop paying billions of dollars of subsidies critical to insurance plans under the Affordable Care Act, insurance premiums would rise by 20 percent next year, according to a new analysis by the nonpartisan Congressional Budget Office.

The cancellation of subsidies could lead some insurers to withdraw from the program, potentially leaving 5 percent of Americans living in areas with no insurance options for 2018 — although within two years, CBO said, insurers should be able to adjust to the change.

The subsidies, called cost-sharing reductions, are used to help lower-income Americans afford their deductibles and copayments. The fate of the payments, projected to add up to $7 billion this year, is uncertain, as they have been challenged in court and are the subject of Trump’s recurring threats. Many insurers have cited the uncertainty as a reason to seek higher premiums or to leave some states’ marketplaces altogether.

But the CBO found that any premium increases will have an almost paradoxical effect: For the most part, individuals will not pay more for health insurance, but the government will. That’s because people who make up to four times the federal poverty level receive tax credits from the government that limit their monthly premiums.

Because of the way tax credits are calculated, if the premiums go up due to the elimination of cost-sharing reductions, the size of the tax credits for the people buying subsidized insurance in the marketplaces set up by the Affordable Care Act will grow. Ultimately, the government’s portion of those costs would cause the federal deficit to increase by $194 billion over the next decade.

Here’s an example that shows how this works. Under the current scenario, in 2026, a 64-year-old person with an income of $56,800 — above the level at which they would have qualified for a plan with cost-sharing reduction — would receive a premium tax credit of $8,550. But if cost-sharing reductions were discontinued, the premium tax credit would grow to $11,800.

People who do not qualify for cost-sharing reductions also would receive more generous government assistance in paying their premiums.

“Most people would pay net premiums … that were similar to or less than what they would pay otherwise,” the CBO projected. The number of uninsured people would actually be slightly less than under the status quo starting in 2020, the CBO said, because the more generous tax credits would make purchasing insurance more attractive.

Insurers have been insistent that the cost-sharing reductions be paid, and they have been seeking a commitment that they will be paid next year. One of the key assumptions that the CBO made in its analysis is that the decision to stop paying the subsidies in 2018 would be made by the end of August. It has been unclear when or if the White House will make a decision about the payments to provide that reassurance.

One of the major fears about the marketplaces has been that there will be no choices for people to buy health insurance. That appears increasingly unlikely, though many areas of the country are likely to only have one insurer.

On Tuesday, Nevada Gov. Brian Sandoval announced that the insurer Centene would offer plans in 14 counties that had been at risk of having no insurer selling health plans on its Affordable Care Act marketplaces. That leaves two counties at risk of having no insurers selling plans next year — Menominee County in Wisconsin and Paulding County in Ohio. A Kaiser Family Foundation analysis found that 381 people currently buy plans in those counties.